Why the US and the world's economic resilience rests on the top 10% US earners

The American consumer, a major driver of global economic growth, has remained surprisingly resilient during a tough year for the US economy.

However, deeper analysis shows that the top 10% of earners - households earning at least $250,000 annually - are the main drivers of this sustained spending. They now represent 49.2% of total consumer expenditure, a record high since record-keeping began in 1989, compared to just 36% thirty years ago.

For global investors, this concentration represents both the key to understanding the recent record-breaking multi-year stock market rally and what is becoming a substantial vulnerability, creating a potentially fragile foundation for future growth.

Several US CEOs are drawing attention to the unexpected ongoing resilience in consumer behaviour. Card payment data from Visa and Mastercard through October 2025 also reflects sustained transaction volumes. Services spending, in particular, has remained robust, with affluent consumers driving growth in categories like luxury travel and high-end goods.

Despite this evidence of still-robust consumer spending among the wealthy, global investors are concerned that America is increasingly relying on its wealthiest citizens for the country’s economic health, creating a fragile foundation for future growth.

The main concern is that wealthy households have a large portion of their wealth in stocks, and with US stock markets near record highs, this has kept their spending strong. According to Bank of America, in the second quarter of 2025, households in the top 20% by income owned an average of $1.6 million in stocks and mutual funds, which is over ten times the $130 000 held by the next income group. When the S&P 500 increases 15% year-over-year, as it did in Q3 2025, these gains often surpass annual salary raises and continue to boost spending.

Consumer spending, making up about 70% of US economic output, is the main link between rising asset prices and broader economic activity. However, this growth model, driven by consumption, faces growing challenges that should worry investors with international portfolios. The long-term viability of current spending habits is becoming increasingly doubtful for several reasons.

The labour market, a key driver of consumer confidence, is showing clear signs of decline. Job creation in the US has slowed to levels usually seen during recessions. Even more concerning is the fact that there are now 7.4 million unemployed Americans, compared to just 7.2 million available jobs, the first time since 2021 that labour demand has dipped below supply. This change led the Federal Reserve to resume rate cuts, with markets expecting further reductions before the end of the year.

Second, household financial buffers are shrinking. The personal savings rate has fallen to 4.6% as of August 2025, the lowest point of the year and significantly below the higher rates that previously acted as a cushion earlier in the economic cycle. Pandemic-era savings have mostly been used up, and Bank of America data shows that after-tax wage growth for lower-income households has slowed considerably throughout 2025. These households, although they make up a smaller share of total spending, have a higher marginal propensity to consume, meaning their cutbacks could have a larger effect on overall demand.

Third, credit stress indicators are flashing warning signals. Student loan delinquencies have increased since the resumption of repayment obligations, while credit card and auto loan delinquency rates remain higher than pandemic lows. Although affluent households still have borrowing capacity, with their credit card debt below 2019 levels, the same cannot be said for middle- and lower-income groups, whose debt burdens have surpassed pre-pandemic totals.

The worldwide effects of a US consumer slowdown would be significant and widespread. Export-driven economies in East Asia, Germany, and Mexico would encounter immediate headwinds from decreased American import demand. Commodity exporters would experience price drops as US consumption of oil and industrial products weakens. Corporate earnings, especially in cyclical and consumer discretionary sectors, would likely face downward revisions, probably leading to defensive portfolio shifts worldwide.

Perhaps most critically, a sharp decline in equity markets, which is the very wealth effect that supports affluent consumption, could quickly turn this slowdown into something more serious. Research from Apollo Global Management indicates that current economic data are sending mixed signals, with strong GDP numbers conflicting with weak employment figures. They argue that job figures might be artificially suppressed by AI implementation and reduced immigration, suggesting that the Fed should prioritise inflation over employment concerns.

If markets have mispriced this risk and anticipated rate cuts don't happen, or if employment worsens faster than expected, US stocks could decline significantly from their high levels. This drop would quickly affect the wealth effect that supports high consumer spending among the wealthy, possibly causing the recession that strong consumption has so far avoided.

To manage risks, global investors should carefully watch US labour market data, household saving rates, and consumer credit indicators. Although the strength of the American consumer is a reality, it is based on a foundation that is narrower and more fragile than overall data indicates. The concentration of spending power among the wealthy, along with their significant exposure to the equity markets, can serve as a transmission mechanism that might magnify shocks in either direction.

Economic growth could continue if wage increases persist, the Fed manages a soft landing, and stock markets remain supported. However, the margin for error has greatly narrowed, and consumer spending, corporate profits, and global growth face the risk of unexpected outcomes.